Hospital merger deliberations detailed, slow

Groups vetting the area’s proposed hospital system merger are expressing it loudly and clearly: If Wellmont Health System and Mountain States Health Alliance combine, the new entity must not just maintain access to health care in the rural parts of its geographic service area (GSA), it must enhance it. Other messages to the systems also are coalescing as the “COPA Index Advisory Group” in Tennessee and the Southwest Virginia Health Authority (SVHA) help vet the merger proposal before it moves exclusively to the state capitals in Nashville and Richmond for a final ruling. Among them are: Be transparent with your data, and be part of a health information exchange that is accessible, affordable and open to all other providers and practitioners. Use some of the cost savings from efficiencies to improve nurses’ pay and better recruit and retain specialists. Lower the cost of care. Provide a level playing field for independent clinicians and practices, as well as insurance companies and other payors.

The rural concern was writ large at the May 25 SVHA meeting in Abingdon, Va. That meeting occurred one day after the COPA advisory group met in Blountville, Tenn. and finalized its index of measures by which the Tennessee Department of Health would annually “grade” a new system should a merger be approved.

The regional groups’ tasks differ slightly. Both, though, revolve around the states’ requirement, as rules governing Tennessee’s COPA law state, to provide “active state supervision to protect the public interest and to assure the reduction in competition of health care and related services continues to be outweighed by clear and convincing evidence of the likely benefits of the Cooperative Agreement…”

Those requirements, in turn, stem from the laws allowing the mergers, which are aimed at providing “state action immunity” from federal antitrust involvement. The primary “prongs” of that immunity are an expressed state policy to displace competition with regulation, and “active state supervision.”

A heartfelt plea in Virginia

In Abingdon, on a day that saw little discussion of SHVA members’ dozens of specific questions about the application itself, a handful of Lee County, Va. residents implored the board to require that application to include specific provisions for reopening the Pennington Gap hospital that Wellmont closed in 2013. The application as submitted Feb. 16 makes no specific mention of Lee County, a rural area on the northwest end of the systems’ GSA that stretches 70 miles from Cumberland Gap in the west to its eastern border near Big Stone Gap.

Around two dozen Lee Countians made the trip to Abingdon, and a handful spoke about various consequences of the hospital’s closure. Lee County Hospital Authority vice chairman Ronnie Montgomery provided a timeline and was followed by Melanie Jorgensen, a retired judge who pulled no punches about the community’s desires. “The agreement says this merger would, among other objectives, improve access to health care,” Jorgensen said. She noted a specific benefit listed by the applicants as keeping hospitals in geographic proximity to patients. “How can that be without the opening of our Lee County hospital,” she said, adding that the application makes no mention of opening a hospital in Lee County.

“We ask that you give your approval to the cooperative agreement only upon the condition that the Lee County hospital be opened,” Jorgensen said.

After Jorgensen, Jill Carson, Howard Elliott and Lee County Sheriff Gary Parsons ticked off the various ill effects the closure has had on the county of 25,000 that’s been hard hit by the decline of the coal and tobacco industries. Carson spoke of the impact on families who, in specific cases, have seen loved ones die or be put at risk of death by the lack of a nearby facility. Parsons reiterated that, noting the stress on EMS providers with the closest hospitals a long drive away. “The golden hour (the critical time during which heart attack victims have more chance of surviving if they get to a hospital) is lost for these folks in Lee County,” Parsons said. “The fact of the matter is, people are dying because we don’t have a hospital in Lee County.” Elliott pointed to the “big hit” of 150 lost jobs the hospital closure had on Lee County. He said housing starts have plummeted and attracting any new jobs is next to impossible without a hospital. “We had the school system, the hospital and coal,” Elliott said of the county’s one-time economic base. “Now we have the school system.”

MSHA has been in discussions with Lee County representatives about the possibility of its coming in as a provider in the hospital building, but those talks have not neared a conclusion as yet.

The May 25 meeting also included a brief presentation from Doug Gray of the Virginia Association of Health Plans, the health insurance industry’s lobbying group. Gray cautioned the SVHA to consider what he called three critical “themes” in health care. And it concluded with Chairman Terry Kilgore – the Virginia delegate who authored the language enabling the merger to be considered in Virginia – saying the SVHA’s five committees had developed 68 questions for the hospital systems to provide clarification on prior to the Authority reaching a comfort level about deeming the application complete and beginning a 150 business day review process that ultimately will be adjudicated in Richmond.

Gray, who said his group represents eight insurance companies that have contracts with Wellmont and/or Mountain States, said the growing percentage of government-funded health care is a major consideration the merger application should address. He said such plans still use the insurance industry, which still negotiates rates with providers. “They want to see some competition amongst the health plans,” Gray said of Medicaid, Medicare, and the government-subsidized health insurance exchanges. Each of those programs offers clients the choice of multiple insurance carriers from which to choose, Gray said, in order to produce competition and, “they want us to get that competition out of you, the providers.”

Gray mentioned the continuing shift from acute inpatient care to outpatient settings as a second major theme that ought to be part of the merger consideration. The third theme he mentioned was the rise of technology in health care, including telemedicine, and the increase in different types of providers giving rise to things such as nurse-managed clinics. Gray also questioned whether the state would be able to adequately develop the tools to regulate the merged system post-approval. “That supervision is not going to be inexpensive, and it has to be paid for,” Gray said. “And that supervision has to say, ‘look, you said you’d do x, are you doing x?’”

It will be at least this month before the SVHA deems the application complete. After redundant questions among the 68 its five work groups have developed are eliminated, what remains will be sent to the hospital systems to answer. Those groups have raised pointed questions not just about rural care, but about a host of other issues including the Virginia operations not getting short shrift as the new system looks for efficiencies. During the May 25 meeting, SVHA Chairman Terry Kilgore, the Republican delegate who authored the statutory changes that paved the way for a potential merger, alluded to the difficulty of the group’s task. “I have a friend in the General Assembly who bases his consideration of issues on, ‘this is rocket science’ or ‘this isn’t rocket science.’ This is rocket science.”

Following the meeting, Kilgore said the Lee County issue is one he expects to be addressed, “with the new corporation, assuming that we approve the plan.”

Tennessee advisory group wraps up its work

In Blountville, Tenn., the 16-member “COPA Index Advisory Group” met for roughly 90 minutes May 24 and finalized its index recommendations to the Tennessee Department of Health. By then, members had put in roughly 24 hours in public “listening sessions” and work sessions, along with study time, as they aimed to develop an index by which the state can measure the effectiveness of a merger, should one be granted.

The group was appointed by Commissioner of Health Dr. John Dreyzehner. Chaired by Sullivan County Health Department Director Gary Mayes, it included representatives from government, health care, public health, business, health insurance and education.

The index will allow the state Department of Health (TDH) to monitor whether the benefits a new system is providing in a variety of categories outweigh the disadvantages created by reduced competition. Those categories include access to care; population health; economic; and “other.”

Group members batted around ideas about the best wording and measures for the topics they had determined as top priorities. Ultimately, Dreyzehner’s office will take their recommendations under consideration and develop a final set of measures.

Cost of care provided by a new system should be contained as measured by an up-to-date benchmark for a comparable market area as established by the state (this differs significantly from the systems’ cost containment suggestion offered in the COPA application)

Employment/contracting with physicians by the new system shouldn’t exceed 30 percent of the total physician population in the geographic service area

Part of the margins derived from efficiencies should go toward increasing pay for system-employed nurses, who earn significantly less than their counterparts in adjoining markets

A new system should use a Health Information Exchange that is also accessible and affordable to all providers, and which the system will use to share data as permitted by law

Independent satisfaction surveys should be conducted annually with employees, patients, physicians and payors and included in the results in the annual report.

The entire proposed list, and other information regarding Tennessee’s COPA process, is available at tn.gov/health/article/certificate-of-public-advantage. A public hearing at which speakers will have three minutes to speak on whether the COPA application should be approved is set for 5:30 p.m. June 7 at Northeast State Community College’s performing arts center. TDH also is accepting written comments on whether the COPA application should be granted or denied, past its original June 7 deadline. Those comments, which can also be made through the COPA website, will be accepted for 60 days after the COPA application is deemed complete, an action which had not yet occurred when the Business Journal went to print.